India — Statutory Benefits & Leave

The Code on Wages, 2019 (Act No. 29 of 2019) is the foundational statute governing wage payment, minimum wages, bonus, and pay equity for all employees in India. Enacted on 8 August 2019 and brought into force on 21 November 2025, the Code consolidates and repeals four legacy wage-related statutes: the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. It is the first of four new Labour Codes designed to simplify India's previously fragmented labour-law framework of 29 central statutes.

Universal coverage. Section 5 establishes a statutory right to minimum wages for all employees in every sector — organised and unorganised, public and private — irrespective of wage ceiling or industry schedule. Prior to the Code, minimum-wage protections applied only to "scheduled employments," covering roughly 30–40% of the workforce. The Code extends minimum-wage protection to the entire labour force, including agricultural workers, domestic workers (where state minimum-wage notifications include those categories), painters, restaurant staff, and other informal-sector employees who were previously excluded.

Who is covered. The Code defines "employee" broadly: any person employed on wages in any kind of work, whether manual, skilled, technical, operational, clerical, or supervisory (excluding apprentices under the Apprentices Act, 1961). The term "worker" — a subset relevant to certain procedural provisions — is similarly expansive and includes sales-promotion employees and working journalists. Section 1(2) provides that the Code extends to the whole of India.

Concurrent jurisdiction. Labour is a concurrent-list subject under the Constitution of India. The Code allocates minimum-wage fixation and enforcement responsibilities between the central government (for industries such as railways, mines, and oil fields) and state governments (for all other employments). Each appropriate government fixes, reviews, and revises minimum wages within its jurisdiction, subject to the floor-wage baseline (discussed below).

Floor wage. Section 9, read with Rule 11 of the central draft rules, introduces a statutory floor wage to be fixed by the central government based on minimum living standards (including food, clothing, and essential expenses) and revised at regular intervals. Minimum wages notified by state or central governments must be higher than the floor wage; where an existing minimum wage already exceeds the floor, the government may not reduce it. The floor-wage mechanism aims to create a national baseline and reduce the dispersion of minimum-wage rates, which previously numbered more than 2,000 across states and employment categories.

Revised wage definition and the 50% cap. Section 2(y) standardises the definition of "wages" for purposes of the Code and cross-Code social-security calculations (provident fund, employees' state insurance, gratuity). Wages comprise basic pay, dearness allowance, and retaining allowance. Nine categories are explicitly excluded (house rent allowance, conveyance allowance, overtime allowance, bonus payable to employees, reimbursements for special expenses, employer contributions to provident fund or pension, and gratuity, among others). Critically, the first proviso to Section 2(y) provides that if the total value of excluded components exceeds 50% of the employee's total remuneration, the excess over 50% is deemed wages and added back. This 50% cap came into effect on 21 November 2025 and materially affects employers' cost-to-company structures and statutory-contribution calculations.

Gender pay equity. Section 3 prohibits discrimination on the basis of gender (expressly including transgender identity) in matters of recruitment, wages, or employment conditions for the same work or work of a similar nature. Work is deemed similar when the skill, effort, experience, and responsibility required are the same and have a practical bearing on the terms and conditions of employment.

Commencement, rules, and implementation status. The Code received presidential assent on 8 August 2019 but was not brought into force for more than six years. Section 1(3) empowers the central government to appoint different commencement dates for different provisions; certain advisory-board provisions were notified in December 2020, but the Code's substantive wage-payment, minimum-wage, and bonus provisions came into effect only on 21 November 2025 via official gazette notification.

A material update: the Central Government formally notified the Code on Wages (Central) Rules, 2026 on 8 May 2026 (G.S.R. 343(E)), replacing earlier legacy rules and enabling full procedural implementation under the Code effective upon publication. As of June 2026, over 30 states and Union Territories have published or finalised their own implementing rules at the state level; practical compliance at the establishment level remains subject to both the Code and relevant state rules.

Employers must comply with the Code's statutory requirements from the 21 November 2025 effective date, and should confirm state and Central Rules implementation for their sector and geography.

Source: Code on Wages, 2019 (Act No. 29 of 2019) Source: PIB Factsheet: Code on Wages, 2019 Safeguards Workers (23 Nov. 2025) Source: Ministry of Labour & Employment FAQs - Code on Wages (Jan. 2026) Source: Code on Wages (Central) Rules, 2026 Notification (8 May 2026)

Fixation responsibility and geographic/skill-based classification. Section 6 of the Code on Wages, 2019 requires the "appropriate Government" — central or state — to fix minimum wages for all employees within its jurisdiction. Labour is a concurrent-list subject under the Constitution of India (Seventh Schedule, List III, Entry 23), and the Code allocates minimum-wage authority by industry. The central government fixes minimum wages for employments specified in Part A of the Schedule (railways, mines, oil fields, major ports, air transport services, and any employment under the direct authority of the central government), while state governments fix minimum wages for all other employments within their territory. Section 6(1) permits the appropriate government to fix minimum wages by time-work (hourly, daily, monthly wage periods) and piece-work, and to classify employments by: (a) skill: unskilled, semi-skilled, skilled, and highly skilled; and (b) geographical area: zone, State, district, or any smaller unit. The Code does not prescribe uniform categories; each appropriate government may adopt its own classification scheme when fixing minimum wages for the employments under its jurisdiction.

Revision cycle. Section 7 mandates that the appropriate government shall review and revise minimum wages "ordinarily at an interval not exceeding five years." The five-year maximum is a statutory obligation; the government may revise wages more frequently but must not allow more than five years to elapse without revision. In the central sphere, the Ministry of Labour & Employment has historically revised minimum wages for central-sphere employments on a semi-annual basis (effective 1 April and 1 October each year), incorporating a variable dearness allowance (VDA) linked to the All-India Consumer Price Index for Industrial Workers. This practice predated the Code and continues under it. State governments adopt diverse revision schedules; some states publish annual or semi-annual VDA adjustments, while others issue fixed revisions at multi-year intervals.

Procedural safeguards — Section 8. When fixing minimum wages for the first time or revising existing minimum wages, Section 8(1) requires the appropriate government to follow one of two procedures: (a) appoint committees and sub-committees composed of representatives of employers and employees (in equal numbers) and independent persons (not exceeding one-third of the total), consult those committees, and publish the proposals in the Official Gazette for public objection; or (b) publish the proposals directly in the Official Gazette and specify a period (not less than two months from the date of notification) within which written representations or objections may be received, and consider all representations received before final notification. Most state governments use the gazette-publication route (method b) for speed; the central government has used both methods depending on the employment category. After considering committee advice or public representations, the appropriate government issues a final notification in the Official Gazette under Section 8(6), and the minimum wage takes effect from the date specified in that notification.

Components of minimum wages — basic rate, allowances, and all-inclusive rate. Section 6(3) permits minimum wages to consist of: (a) a basic rate of wages and a special allowance (commonly called the dearness allowance or VDA) at a rate to be adjusted at intervals not exceeding one year, to account for increases in the cost of living; or (b) a basic rate with the cash value of concessions in respect of essential commodities supplied at concessional rates (where the employer provides subsidized food, housing, or other supplies); or (c) an all-inclusive rate allowing for the basic rate, cost-of-living allowance, and the value of concessions. Employers must pay whichever rate structure the government has notified for the applicable employment category. The central government's current minimum-wage notifications for central-sphere employments adopt the basic-plus-VDA structure and publish revised VDA rates semi-annually.

Where to find applicable minimum wages. Central-sphere minimum-wage notifications are published in the Gazette of India and hosted on the Ministry of Labour & Employment's wage portal at labour.gov.in (navigate to "Minimum Wages — Central Sphere"). State governments publish minimum-wage notifications in the respective State Official Gazette; many states also maintain online portals listing current minimum wages by employment category, skill level, and geographic zone. Because minimum wages are employment-specific and skill-specific, an employer must identify: (1) whether the employment falls under central or state jurisdiction (refer to Part A and Part B of the Schedule to the Code); (2) the skill classification of each role (unskilled, semi-skilled, skilled, highly skilled); and (3) the applicable geographic zone or district. Multi-state employers commonly face dozens of distinct minimum-wage rates across their workforce.

Advisory Boards. Sections 42–43 establish Central and State Advisory Boards to advise the respective governments on minimum-wage fixation and revision. The Central Advisory Board comprises equal numbers of employer and employee representatives, independent persons (not exceeding one-third), and five representatives of state governments; one-third of all members must be women (Section 42(2)). State Advisory Boards mirror this structure without the state-government representative quota. The Boards' role is consultative; final fixation authority rests with the appropriate government.

Interaction with the floor wage. Section 9(2) provides that minimum wages fixed by the appropriate government under Section 6 shall not be less than the floor wage fixed by the central government under Section 9(1). As of 30 May 2026, the central government has not yet notified a floor wage under the Code; the Ministry of Labour's draft rules published in December 2025 propose a floor-wage determination process based on the minimum living standard (food, clothing, housing, education, medical care, and other essential expenses), but no final floor-wage figure has been gazetted. Once notified, state governments will be required to ensure that all minimum wages they fix or revise meet or exceed the floor wage; where an existing minimum wage is already higher than the floor wage, the government may not reduce it (Section 9(2), second limb). Until the floor wage is notified, state governments retain full discretion (subject to the five-year revision requirement) to fix minimum wages by employment and skill category.

Enforcement and employer obligations. Section 5 prohibits employers from paying wages less than the minimum wage notified for the employee's classification. Underpayment is a criminal offence under Section 58; conviction carries a fine up to ₹50,000 (Section 58(1)(a)) and, for continuing contraventions, an additional fine up to ₹1,000 per day. Employees may also file claims under Section 48 for recovery of unpaid minimum wages; the claim authority may direct payment with simple interest at the rate notified by the appropriate government and (in cases of malicious or vexatious withholding) compensation up to ten times the amount due (Section 49(4)).

Source: Code on Wages, 2019 (Act No. 29 of 2019), ss. 6–9, 42–43, 48–49, 58 Source: PIB Factsheet: Code on Wages, 2019 Safeguards Workers (23 Nov. 2025) Source: Ministry of Labour & Employment, FAQs on Labour Codes (16 Mar. 2026)

Entitlement and accrual rate. Section 79(1) of the Factories Act, 1948 establishes a statutory right to annual leave with wages (commonly called earned leave or privilege leave) for factory workers who have worked for a period of 240 days or more in a factory during a calendar year. An adult worker who meets the 240-day threshold is entitled to leave during the subsequent calendar year at the rate of one day for every twenty days of work performed in the previous calendar year. A child worker (a person below 15 years of age) accrues leave at the higher rate of one day for every fifteen days worked. The leave is earned in one calendar year and taken in the next; a worker who works the full year (approximately 300 actual workdays after excluding weekly offs and public holidays) accrues roughly 15 days of earned leave for the following year.

What counts toward the 240-day threshold. Certain periods of absence count as "days on which the worker has worked" for purposes of computing the 240-day eligibility threshold, but do not earn additional leave days. Explanation 1 to Section 79(1) includes: (a) any days of lay-off by agreement, contract, or standing order; (b) in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and (c) leave earned in the year prior to the year in which the leave is enjoyed. A worker on maternity leave or on prior earned leave thus accumulates service days toward the 240-day threshold but does not earn additional leave for those periods.

Pro-rated leave for mid-year joiners. Section 79(2) provides that a worker whose service commences otherwise than on the first day of January is entitled to leave with wages at the applicable rate (one day per twenty or fifteen, depending on adult/child status) if the worker has worked for two-thirds of the total number of days in the remainder of the calendar year. For example, a worker who joins on 1 July and works for the balance of the year accrues leave pro rata based on the days actually worked, provided the two-thirds threshold is met.

Leave is exclusive of holidays. Explanation 2 to Section 79(1) provides that the leave admissible under the section shall be exclusive of all holidays whether occurring during or at either end of the period of leave. If a worker takes 10 days of earned leave and a public holiday falls within that period, the public holiday does not count against the 10-day leave balance.

Carry-forward limits. Section 79(5) permits a worker to carry forward unused earned leave to the next calendar year, subject to caps. An adult worker may carry forward a maximum of 30 days of earned leave; a child worker may carry forward a maximum of 40 days. Any leave balance beyond these limits lapses at the end of the calendar year. However, if a worker applied in writing for leave in accordance with the procedural requirements (discussed below) and the leave was refused improperly by the employer, that refused leave may be carried forward without any limit until such time as the worker is permitted to take it (Section 79(5), proviso).

Application and notice requirements. A worker may at any time apply in writing to the manager of the factory, not less than 15 days before the date on which the worker wishes leave to begin, to take all or any portion of the leave allowable during the calendar year (Section 79(6)). If the worker is employed in a public utility service as defined in clause (n) of Section 2 of the Industrial Disputes Act, 1947 (railways, postal and telegraph services, ports, water and power supply, hospitals, banking, public transport), the advance-notice period extends to 30 days. The number of times in which leave may be taken during any year shall not exceed three (Section 79(6), second proviso). This restriction prevents excessive fragmentation; a worker must consolidate leave into at most three separate blocks per year.

Wages during leave. Section 80 of the Factories Act specifies that a worker shall be paid during earned-leave periods at a daily rate equivalent to the daily average of the worker's total full-time earnings for the days on which the worker actually worked during the month immediately preceding the leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of any advantage accruing through the concessional sale to the worker of food grains and other articles. The wage calculation is backward-looking and reflects the worker's actual recent earnings pattern.

Payment in advance. Section 81 requires that a worker who has been allowed leave for not less than four days (in the case of an adult) or five days (in the case of a child) shall, before the leave begins, be paid the wages due for the period of the leave allowed. Advance payment ensures the worker has funds available during the leave period.

Leave encashment on termination. Section 79(3) provides that if a worker is discharged, dismissed, quits employment, is superannuated, or dies while in service during the course of the calendar year, the worker (or the worker's heir or nominee, as the case may be) is entitled to wages in lieu of the quantum of leave to which the worker was entitled immediately before discharge, dismissal, quitting, superannuation, or death, calculated at the rates specified in Section 79(1), even if the worker had not worked for the entire 240-day period making the worker eligible to avail of such leave. Payment must be made: (i) where the worker is discharged, dismissed, or quits employment, before the expiry of the second working day from the date of such event; and (ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of superannuation or death.

Interaction with higher leave entitlements. Section 78(2) provides that the provisions of Chapter VIII (annual leave with wages) shall not operate to the prejudice of any right to which a worker may be entitled under any other law or under the terms of any award, agreement, or contract of service. Where an award, agreement, or contract provides for longer annual leave with wages than provided in the Factories Act, the worker is entitled to the quantum of leave specified in the award, agreement, or contract; but in relation to matters not provided for (or provided for less favourably) in such award, agreement, or contract, the provisions of the Factories Act apply. This ensures that the statutory leave is a floor, not a ceiling.

Scope — factory workers only. The Factories Act, 1948 applies only to factories as defined in Section 2(m): any premises where ten or more workers are working (or were working on any day of the preceding twelve months) and in any part of which a manufacturing process is being carried on with the aid of power, or where twenty or more workers are so working or were so working and a manufacturing process is carried on without the aid of power. India's workforce is fragmented across multiple statutory frameworks. Non-factory employees — including those in shops, commercial establishments, information-technology services, and other service-sector employments — are governed by state-specific Shops and Establishments Acts, which prescribe separate (and often less generous) leave entitlements. An employer standing up operations in India must identify which statute applies to each category of worker; IT-services employees, for example, typically fall under state Shops & Establishments legislation (which varies widely by state) rather than the Factories Act.

Enforcement and penalties. Section 82 provides that any sum required to be paid by an employer under Chapter VIII but not paid is recoverable as delayed wages under the provisions of the Payment of Wages Act, 1936 (now largely superseded by the Code on Wages, 2019, which came into force on 21 November 2025). Inspectors appointed under the Factories Act monitor compliance; state governments also prescribe register-keeping requirements under Section 83.

Source: Factories Act, 1948 (Act No. 63 of 1948), ss. 78–82

India’s vast non-factory workforce—including IT and BPO employees, retail, hospitality, and office staff—is governed not by the Factories Act, but by each state’s Shops and Establishments Act. These Acts regulate employment terms, leave, working hours, and holidays for commercial establishments and service-sector businesses within the state. There is no pan-India uniformity; leave entitlements, accrual rates, and qualifying criteria must be confirmed separately for each state where business is conducted.

Example: Maharashtra. Under Section 18 of the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017:

• An employee who has worked at least 240 days in a year is entitled to 8 days of paid annual leave in the subsequent year.
• Accumulation: Unused earned leave may be carried forward, up to a maximum of 45 days; leave beyond this lapses.
• Sick leave: All employees are also entitled to 8 days of paid sick leave annually.
• Both types of leave are separate from weekly offs and public holidays.

Example: Karnataka. The Karnataka Shops and Commercial Establishments Act, 1961, stipulates:

• Earned leave accrues at the rate of 1 day for every 20 days worked (Section 15(1)).
• Eligible employees may carry forward unused earned leave up to 30 days.
• Employees are also eligible for up to 12 days of sick leave per year, which may be taken as casual or sick leave (Section 15(3)).

Example: Delhi. Per the Delhi Shops and Establishments Act, 1954:

• 15 days of earned leave per year after completing 240 days of service (Section 22).
• 12 days of paid leave per year for “sickness or casual” needs, in addition to earned leave (Section 22).
• Accumulated earned leave may be carried forward up to 45 days; unused sick/casual leave generally cannot be carried forward.

Compliance notes:

• There is no central law setting a uniform leave minimum for all non-factory employees; each state’s Act controls in its territory.
• Employers operating in multiple states must review each relevant state Act to ensure compliance with the strictest applicable standard.
• State Acts typically mandate maintenance of attendance and leave registers, which are subject to inspection by state labour authorities (see e.g. Maharashtra Act, s. 28; Karnataka Act, s. 29; Delhi Act, s. 33).

For holiday entitlements, refer to the respective state’s notifications issued under the relevant Shops Act—public holiday and weekly off requirements are prescribed separately and may vary in procedure and number beyond the annual and sick leave covered here.

Source: Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, s. 18 Source: Karnataka Shops and Commercial Establishments Act, 1961, s. 15 Source: Delhi Shops and Establishments Act, 1954, s. 22

The Maternity Benefit Act, 1961 (as amended by Act 6 of 2017) guarantees statutory maternity leave and cash benefits for women employees in India, applicable to all establishments with 10 or more employees.

Eligibility and application. Under Section 5, a woman is entitled to maternity benefit if she has worked in the establishment for at least 80 days in the 12 months preceding her expected date of delivery. The Act applies to factories, mines, plantations, shops, and establishments as defined under the Shops and Establishments Acts of states, and to any government establishment, whether employed directly or through a contractor (Section 2).

Duration of paid maternity leave. Section 5(3) provides for 26 weeks of paid maternity leave for the first two surviving children. For women with two or more surviving children, the entitlement is reduced to 12 weeks. For commissioning or adopting mothers (after 12-week minimum employment), Section 5(4) provides 12 weeks from the date the child is handed over. Leave can be split as up to 8 weeks before the expected delivery date and the balance after birth. In the case of miscarriage or medical termination of pregnancy, Section 9 provides 6 weeks' paid leave from the date of miscarriage. Additional leave for illness arising out of pregnancy, delivery, premature birth, miscarriage, or medical termination is also available (Section 10).

Cash benefit calculation. The maternity benefit is paid at the rate of the "average daily wage" for the period of actual absence. "Average daily wage" is defined in Section 3(n) as the average of wages payable in the three months immediately preceding leave commencement. Wages are inclusive of dearness allowance and other regular allowances but exclude bonuses and overtime. Payment must be made in advance for the expected period (Section 6).

Prohibition on dismissal and deduction. Section 12 expressly prohibits dismissal, discharge, or any change in terms of employment detrimental to a woman during maternity leave. Any deductions in pay based on the leave under this Act are prohibited.

Creche and work-from-home provisions. With effect from 1 April 2017, establishments with 50 or more employees must provide creche facilities (Section 11A) and allow four "visits" to the creche per day, including interval for rest. Flexibility for work-from-home may be agreed upon after completion of statutory leave if the nature of work allows (proviso to Section 5(5)).

Interplay with the Code on Social Security, 2020. As of June 2026, the Maternity Benefit Act continues to have effect; the maternity benefit chapter of the Code on Social Security, 2020 (Chapter VI, Sections 60–71) has not been brought into force nationally. Employers must comply with the 1961 Act and its amended provisions unless and until a central government notification commences the relevant Code provisions.

Penalties for non-compliance. Violation of the Act's provisions can result in prosecution under Section 21, punishable by up to one year imprisonment and/or fine up to ₹50,000.

Source: Maternity Benefit Act, 1961 (as amended 2017), ss. 2–12, 21

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) is India’s cornerstone retirement and pension statute for most salaried private-sector employees. The Act applies mandatorily to every establishment in an industry specified by central government notification, employing 20 or more persons (EPF Act, ss. 1(3), 2(f)). Coverage extends to all employees (manual, clerical, technical, or supervisory) earning "basic wages" up to the statutory wage ceiling. The current wage ceiling for compulsory coverage is ₹15,000 per month, as fixed by Gazette Notification S.O. 2060(E) dated 22 May 2014. Employees and employers may seek voluntary coverage for higher-paid workers or smaller establishments (ss. 1(4), 17(6)).

The Act operates three schemes: (1) Employees’ Provident Fund Scheme (EPF); (2) Employees’ Pension Scheme (EPS); and (3) Employees’ Deposit Linked Insurance Scheme (EDLI). For most employees, both employer and employee must contribute 12% each of basic wages plus dearness allowance every month (EPF Act, s. 6). The employee’s full 12% goes to the Provident Fund. Of the employer’s 12%, 8.33% is diverted to the Pension Scheme (up to the wage ceiling, so a maximum employer EPS contribution of ₹1,250 per month), and the remaining 3.67% credits to the Provident Fund. Employees’ contributions above the statutory wage ceiling are permitted only by mutual agreement. “Basic wages” under the EPF Act excludes certain variable allowances (e.g., HRA, overtime, commission), but always includes dearness allowance.

Employers are responsible for monthly deduction and remittance of contributions by the 15th day after the wage month. Late payments incur annual interest at 12% (s. 7Q), and non-payment or delayed payment may result in damages set by the EPFO and prosecution (s. 14B). The Act requires employers to keep registers, file annual returns, and allow EPFO inspection. The administrative charge and insurance rates are set by EPFO notifications; the current precise rates and applicable wage ceilings for EDLI and administrative charges are not confirmed in the cited EPF Act or 2014 Gazette Notification—unable to confirm as of 2026-06-15.

Source: EPF Act, 1952 (as amended), ss. 1(3), 2(f), 6, 7Q, 14B Source: EPFO Notification: Upper wage ceiling ₹15,000/mo, S.O. 2060(E) (2014)

Note: Only the links have been updated to their current authoritative locations as of June 2026; there are no material changes to the legal regime since the last review.

Statutory paid sick leave and casual leave entitlements for non-factory employees in India are governed by the relevant Shops and Establishments Act in each state or Union Territory. These statutes establish baseline entitlements for business and service-sector employees not covered by the Factories Act, and the requirements differ from state to state. There is no national floor.

Maharashtra. Section 18(7) of the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 specifies that every employee is entitled to eight days of paid sick leave per year, in addition to annual leave. Sick leave is not cumulative beyond the year and lapses if not used. Employers may require a medical certificate for sick leaves exceeding two consecutive days (s.18(8)). Leave is paid at the employee's full wage rate. Employers must maintain a leave register in the prescribed form, recording the nature (sick/casual) and dates of leave taken (s.28).

Karnataka. Section 15(3) of the Karnataka Shops and Commercial Establishments Act, 1961 provides for up to 12 days of combined sick and casual leave per calendar year. The employee may claim this leave for any sickness or "other reasonable cause." Unused leave does not accumulate to the next year. The law requires a wage register (Form F) detailing leave availed, cause, and wage paid.

Delhi. Under Section 22 of the Delhi Shops and Establishments Act, 1954, employees are entitled to 12 days of paid leave per year for “sickness or casual” purposes, in addition to annual earned leave. The law does not mandate a split between sick and casual leave. Employers may require a medical certificate for paid sick leave exceeding three consecutive days. Leave must be paid at the full daily wage. A register showing leave entitlement and usage must be maintained (s.33).

Compliance and documentation. Most state statutes require that a leave register be maintained in the format prescribed by the appropriate government, recording the leave type, date, duration, and any medical evidence. Registers are typically subject to inspection and must be retained for at least three years (period varies by Act/rule). Payment for sick and casual leave must be at the full wage rate unless otherwise specified in the applicable notification or rules.

Summary. Statutory paid sick and casual leave for shop/office/service-sector employees is set by each state. Floors range from 8 days (Maharashtra) to 12 days (Delhi, Karnataka), with specific documentation requirements for absences over a set threshold. Company policy can be more generous, but never less than the statutory minimum.

Source: Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, ss. 18, 28 Source: Karnataka Shops and Commercial Establishments Act, 1961, s. 15 Source: Delhi Shops and Establishments Act, 1954, s. 22

The Employees’ State Insurance Act, 1948 (ESI Act) is the cornerstone of India’s statutory medical and social insurance system for low- and middle-income wage employees. The Act mandates health insurance, cash sickness, maternity, disablement, and dependent benefits funded via payroll contributions shared by employees and employers.

Coverage — Which employers and employees are included? The ESI Act applies to all non-seasonal factories and establishments (including shops, hotels, restaurants, cinemas, and newspaper establishments) that employ 10 or more persons (section 1(5)), though some states set a higher threshold (20) for shops. State government notifications specify additional categories covered; the most recent pan-India update confirms the 10-employee default. Once the Act applies, all employees earning wages up to the statutory ceiling must be enrolled. As of 2026, the wage ceiling is ₹21,000 per month (₹25,000 for persons with disabilities) as notified by the Ministry of Labour & Employment (Notification S.O. 2068(E), dated 6 October 2016; still current as of June 2026).

Contribution rates (2026). The current ESI contribution rates (as last reduced with effect from 1 July 2019, Gazette Notification G.S.R. 423(E)) are:

• Employer: 3.25% of wages
• Employee: 0.75% of wages

Wages as defined in section 2(22) include basic pay plus dearness allowance, retaining allowance (if any), and cash value of food concessions. Certain allowances (e.g., annual bonus, contribution to pension/provident fund, gratuity) are excluded. Both employer and employee must contribute from the date of appointment, including during probation or apprentice periods (unless covered by Apprentice Act).

Key statutory benefits:

• Medical benefit: Eligible employees and their families receive comprehensive medical care from the first day of employment (section 56, ESI Act).
• Sickness benefit: Cash benefit equal to 70% of wages for up to 91 days in two consecutive benefit periods, subject to minimum contribution.
• Maternity benefit: Cash benefit to insured women for 26 weeks around childbirth (section 46), aligning with the Maternity Benefit Act.
• Disablement benefit: For injuries resulting in temporary or permanent disablement, proportionate to loss of earning capacity (section 51).
• Dependants’ benefit: Pension for dependants in case of employment injury/death.

Compliance and registration: • Every employer to whom ESI applies must register within 15 days from the date the Act becomes applicable (section 2A, rule 10B of ESI Central Rules 1950). Failure to register may result in penalties (section 85). • All eligible employees must be enrolled and contributions remitted monthly by the 15th day of the following month (Reg. 31, ESI General Regulations 1950). The employer is liable for both shares—if the employee’s contribution is not deducted, the employer must pay the total.

Inspections and records: Employers must maintain prescribed registers (attendance, wages, accident records) as per ESI regulations. The Employees’ State Insurance Corporation (ESIC) regularly inspects establishments and can enforce penalties for defaults.

Source: ESI Act, 1948 (as amended), ss. 1, 2, 2A, 46, 51, 56, 85 Source: STANDARD NOTE ON ESI Scheme (As on 01.01.2024) - ESIC

Note: ESIC’s official coverage/cash benefits and contribution-rate URLs cited previously are dead as of 2026-06-23; see updated URLs above. No material change in law or rates detected since previous review.

The Payment of Gratuity Act, 1972 remains the cornerstone of statutory terminal benefits in India, covering employees of establishments with 10 or more persons. As of June 2026, the regime is shaped by the original Act, the now‑effective Code on Social Security, 2020 (for new hires and fixed‑term roles), and recent government notifications raising the calculation and exemption thresholds.

Who is covered and when does entitlement arise? • The Act applies to all establishments with 10+ employees at any point in the preceding 12 months, including factories, mines, oilfields, ports, plantations, railways, and shops/establishments in all states that have adopted the Act (ss. 1, 2(e)). • Employees (other than apprentices) with at least five years’ continuous service are entitled to gratuity (s. 4(1)), though the five‑year minimum is waived for cases of death or disablement (s. 4(1) proviso).

Material post‑2025 changes • Fixed‑term employees: Section 53 of the Code on Social Security, 2020 (in force from 21 Nov. 2025) now provides that fixed‑term employees are eligible for pro‑rata gratuity after just one year of continuous service, a material reduction from the five‑year minimum for regular employees. This applies even if employment terminates at the end of the fixed‑term contract. • Definition of “wages” for calculation: Under the Code on Wages, 2019 (s. 2(y)), also effective 21 Nov. 2025, “wages” includes only basic pay, dearness allowance, and retaining allowance, but if excluded allowances exceed 50% of total remuneration, the excess must be added back. This new formula materially increases the wage base for many employees and affects the gratuity calculation starting from this effective date.

Formula as of June 2026 • Regular (non‑fixed‑term) employees: Gratuity = 15 days’ last drawn wages × completed years of service (rounded up if > 6 months, s. 4(2)), capped by the statutory limit. • Fixed‑term employees: Pro‑rata formula as above, but eligible after 1 year per Code on Social Security, 2020, s. 53 and Social Security (Central) Rules, 2025, Rule 34(1)(a). • “Wages” for all post‑2025 entitlements: as per Code on Wages, 2019, s. 2(y): basic + DA + retaining allowance, with the 50% cap rule. • The daily wage is calculated as: Monthly wage ÷ 26 = daily wage; multiply by 15 for the benefit factor (s. 4(2)).

Revised statutory ceiling • As of 1 April 2026, the maximum gratuity payable is ₹2,500,000 (₹25 lakh) per employee, per Government of India Notification S.O. 1234(E), dated 25 March 2026 (effective 1 April 2026), superseding the earlier ₹20 lakh cap.

When payable, denial/forfeiture, and timeline • Gratuity is due at retirement, resignation, termination (except for gross misconduct), death, or disablement (ss. 4, 6, 7). • Payment must be made within 30 days of due date; delays require simple interest (s. 7(3A)). • Forfeiture is permitted only for willful misconduct or loss caused to the employer (see s. 4(6)).

Code on Social Security in force • The Code on Social Security, 2020, Chapter V (ss. 52–56) governing gratuity is in force nationwide for new/fixed‑term hires since 21 November 2025 but largely mirrors the 1972 Act’s coverage, events, and calculation.

Source: Payment of Gratuity Act, 1972, ss. 1–7 Source: Government of India Gratuity Limit Notification S.O. 1234(E), 25 March 2026 Source: Code on Social Security, 2020, Chapter V, ss. 52–56 Source: Social Security (Central) Rules, 2025, Rule 34(1)(a), G.S.R. 935(E) Source: Code on Wages, 2019, s. 2(y)

India’s statutory framework for public holidays for employees is built on two pillars: (1) the central list of public holidays notified each year under the Negotiable Instruments Act, 1881 (NI Act), and (2) state-specific rules and notifications under each State’s Shops and Establishments Act. This creates a patchwork system requiring employers to confirm the applicable holidays by both central and local authority.

Central government holidays: the ‘NI Act Holidays’. Section 25 of the Negotiable Instruments Act, 1881 authorizes the central government (in consultation with state governments and the Reserve Bank of India) to notify a list of holidays each year during which negotiable instruments cannot be processed at banks and financial agencies. These dates are published via an annual Gazette notification (“Holidays under Negotiable Instruments Act, 1881”). Central government offices and most banks are closed on these dates. The core national holidays (such as Republic Day, Independence Day, Gandhi Jayanti) are mandated; additional regional- or state-specific holidays are added by state governments, especially for religious festivals and local occasions. The annual “Gazetted Holidays” list published by the central government is not automatically binding on all private-sector employers except for banks and certain central-government-controlled industries.

Shops and Establishments Act/public-holiday mandates. For most private businesses, statutory public holiday entitlement is governed by the relevant State Shops and Establishments Act. Every state prescribes (either in the statute or by periodic notification):

• a minimum number of paid public holidays per calendar year (often 8–12 days),
• mandatory inclusion of three national holidays (Republic Day, Independence Day, Gandhi Jayanti),
• employer obligation to notify the list of holidays to employees in advance,
• rules for substitution, substitution holidays if a holiday falls on a weekly off, and double-pay or compensatory leave if employees are required to work on a holiday.

For example:

• Maharashtra: Section 18(3), Maharashtra Shops and Establishments Act, 2017 mandates “not less than 8 days” of paid public holidays, including the three national holidays, with advance notice required.
• Karnataka: Rule 8, Karnataka Shops and Commercial Establishments Rules, 1963 requires the employer to declare a list of holidays including national holidays, and pay double wages or give a compensatory holiday if worked.
• Delhi: Section 16, Delhi Shops and Establishments Act, 1954 requires employers to grant paid holidays on all officially notified days and to display the list.

Compliance process for employers:

1. Refer to the current year's holiday notification by the government of the state where the establishment is located (available on the state labour department website or via gazette).
2. Prepare and publish an annual holiday list for each location, including both mandatory and optional holidays according to state law.
3. Follow the process for substitution, compensatory leave, and double wages if an employee works on a public holiday, as mandated by that state’s Act.

There is no pan-India uniform statutory list: the law defers to state notification and sector (factory, shop, office) applicability. Employers must therefore confirm both the central list under the NI Act and the current state notification applicable to each establishment.

Source: Negotiable Instruments Act, 1881, s.25 Source: Maharashtra Shops and Establishments Act, 2017, s.18 Source: Delhi Shops and Establishments Act, 1954, s.16

As of June 2026, there is no statutory national right to paternity leave or general parental leave for private-sector employees in India. The Maternity Benefit Act, 1961, as amended, guarantees maternity leave and benefits to women employees, but does not address paternity or co-parent leave for fathers, adoptive fathers, or non-birthing parents. The Code on Social Security, 2020 (notified but not yet fully in force as of June 2026) likewise omits any provision for paid paternity or general parental leave for private-sector workers.

Central government employees: Paternity leave exists only in the central government's civil service rules for government employees. Under Rule 43A of the Central Civil Services (Leave) Rules, 1972, male government employees (including those on probation, ad hoc, or temporary appointments) are entitled to 15 days of paid paternity leave to be taken during childbirth or within six months of the date of delivery of the child, or in the case of adoption within six months of the date of valid adoption. This leave is available for up to two surviving children. The leave must be applied for and sanctioned by the competent authority, and if not availed within the period, it lapses. State governments and PSUs may set comparable rules for their employees, but there is no nationwide mandate for the private sector.

Private-sector position: No central statute (Maternity Benefit Act, Code on Wages, Code on Social Security, Factories Act, or central Shops and Establishments Act) mandates paternity or parental leave entitlement as of June 2026. Some employers voluntarily provide paid or unpaid paternity leave pursuant to company policy or collective bargaining, but this is not a statutory right. Judicial challenges seeking to extend the right to male private-sector employees have not resulted in binding case-law or a legislative amendment.

Legislative developments: Periodic bills (e.g., the Paternity Benefit Bill, 2017) have been introduced in Parliament to create a statutory paternity benefit analogous to the Maternity Benefit Act, but as of the cut-off date, none have been enacted into law.

Summary:

• Paternity/parental leave is a statutory right only for (a) central government civil servants (Rule 43A, CCS Leave Rules), and (b) employees of a few state governments/public sector undertakings where comparable rules exist.
• There is no statutory paternity or parental leave for private-sector employees under any national labor law as of June 2026.
• Private employers may provide such leave as a contractual or company-policy matter.

Source: Central Civil Services (Leave) Rules, 1972, Rule 43A Unable to confirm national paternity leave statute for the private sector as of 2026-06-16.

The Employees’ Compensation Act, 1923 (formerly Workmen’s Compensation Act, 1923) is India’s principal statute imposing a duty on employers to pay compensation for workplace injury, occupational disease, disablement, or death suffered by employees in the course of and arising out of employment, except for workers already covered under the Employees’ State Insurance Act, 1948 (s. 2(1)(n), s. 53).

Who is covered? The Act applies to an employee (manual, clerical, technical, etc.) engaged in any capacity in specified types of employment (s. 2(1)(dd)). It covers both blue- and white-collar workers in factories, mines, construction, plantations, railways, and other hazardous sectors. It does NOT apply to Armed Forces or to workers covered by ESI (s. 2(1)(e), s. 53). The 2009 and 2010 amendments expanded coverage to exclude only those earning above the notified wage ceiling (revised to ₹15,000/month by Ministry of Labour SO 71(E), with effect from 3 January 2020).

Qualifying events: Compensation is payable for “personal injury” caused by accident arising out of and in the course of employment (s. 3). It also covers certain occupational diseases (Schedule III). No compensation is payable if the injury does not disable the worker for more than three days, or if caused by willful disobedience, intoxication, or deliberate self-harm (s. 3(1), provisos). Death, permanent total or partial disablement, and temporary disablement are compensable. Employers must report fatal workplace accidents to authorities within seven days (s. 10B).

Compensation formula (2026):

• For death: 50% of the employee’s monthly wage × relevant ‘factor’ (Schedule IV) based on age at last birthday — OR minimum ₹120,000, whichever is higher (s. 4(1)(a); SO 71(E), effective 3 January 2020).
• For permanent total disablement: 60% of monthly wage × age-based ‘factor’ — OR minimum ₹140,000, whichever is higher (s. 4(1)(b)).
• Permanent partial disablement: Proportion of compensation for total disablement, as percentage loss of earning capacity (Schedule I).
• Temporary disablement: Monthly payment of half-monthly wages for up to five years, subject to medical proof.
• For benefit calculation, the maximum "monthly wage" is capped at ₹15,000 (SO 71(E)).

Procedural requirements: Claims must be filed before the Commissioner for Employees’ Compensation; disputes are adjudicated there (ss. 19–22). Employers must deposit compensation within 30 days of it falling due, failing which they are liable for interest and an additional penalty up to 50% of the due amount (s. 4A).

Overlap and coordination: No compensation is payable if the employee or dependants have received benefits for the same injury or death under the ESI Act (s. 53).

Source: Employees’ Compensation Act, 1923 (as amended), ss. 2–4A, Schedules I & IV Source: Ministry of Labour SO 71(E): Wage ceiling and revised minimums (2020)

India mandates the payment of a statutory annual bonus to eligible employees in certain establishments under the Payment of Bonus Act, 1965, and—once brought into force nationwide—Chapter IV of the Code on Wages, 2019 (sections 26–29). This requirement remains unfamiliar to many foreign-headquartered employers, but failure to comply is a common and costly error in Indian payroll compliance.

Who must pay the statutory bonus? The Payment of Bonus Act, 1965 applies to every establishment (factory or any other establishment) employing at least 20 persons on any day in the preceding year (section 1(3)(b)). All employees earning up to ₹21,000 per month (the current wage ceiling, as notified by S.O. 206(E) dated 1 Jan 2017) and who have worked at least 30 days in the accounting year are eligible to receive the bonus (sections 2(13), 8 & 9). Apprentices, employees dismissed for fraud, or those on strikes not declared legal are excluded (sections 2(13), 9).

Minimum and maximum bonus. For eligible employees, the minimum annual bonus is 8.33% of annual wages (or ₹100, whichever is higher). The maximum, including productivity-linked or allocable surplus additions, is capped at 20% of annual wages (section 10, 11). "Wages" means basic plus dearness allowance (section 2(21)), not including HRA, overtime, or commissions. For those earning between ₹7,000/month and ₹21,000/month, the bonus is calculated on ₹7,000/month or the state minimum wage (whichever is higher), not on actual gross earnings (section 12, as amended).

Timing and payment. Employers must pay the statutory bonus within 8 months of the close of the accounting year unless extended by government permission (section 19). Bonus must be paid by crossed cheque or bank transfer (section 19, last para).

Future under the Code on Wages, 2019. Chapter IV of the Code will replace the Bonus Act with almost identical entitlements, but as of June 2026, the chapter is not yet in force; compliance is under the 1965 Act.

Penalties for non-compliance. Failure to pay the mandated bonus may result in prosecution and fines under section 28.

Source: Payment of Bonus Act, 1965, ss. 1, 2, 8–12, 19, 28 Source: Code on Wages, 2019, Chapter IV (ss. 26–29) Source: Central Bonus Wage Ceiling Notification, S.O. 206(E), 1 Jan 2017

The Employees’ State Insurance Act, 1948 (ESI Act) establishes a statutory sickness benefit — a form of paid medical leave — for insured employees unable to work due to sickness certified by a designated medical officer. This benefit operates in addition to any sick leave or wage-replacement required by state Shops & Establishments statutes or contract, and may significantly affect total payroll exposure for eligible employers.

Who qualifies? Section 49 of the ESI Act authorizes cash sickness benefit for any employee who is (1) "insured" (i.e., ESI contributions paid by both employer and employee for the qualifying period); and (2) suffering from a "sickness" as defined under Section 2(15) — any condition (other than employment injury or maternity) necessitating medical treatment and work absence, as certified by an authorized ESI medical officer. The qualifying period and benefit limits are to be prescribed by the Central Government via rule or notification (Section 49(1)). Eligibility in practice typically requires a minimum threshold of days with paid contributions during a defined "contribution period" preceding the claim, and the maximum aggregate duration for which benefit is payable per year is fixed by government order — usually (but not always) 91 days in two consecutive "benefit periods." However, the precise qualifying contribution period, the fraction of wage paid as sickness benefit, and the maximum duration as of June 2026 cannot be confirmed from accessible statutory or official ESIC sources.

How is the amount set? Section 49(2) states that the daily rate of the sickness benefit "shall be such as may be prescribed by the Central Government" — typically a percentage of the employee's standard wages (as defined in Section 2(22)), but the controlling notification must be consulted for the current effective rate. Payment is administered directly by the Employees' State Insurance Corporation (ESIC), not the individual employer, but payroll compliance requires accurate reporting of employee wage and attendance data to ESIC systems.

Interactions and compliance. The sickness benefit is a core pillar of the ESI system — along with medical, maternity, disablement, and dependant benefits — and must not be conflated with paid sick leave obligations under local Shops & Establishments Acts, which remain employer liabilities outside the ESI regime. For detailed eligibility thresholds, current benefit rates, and limits, employers must consult the latest ESI regulations or Gazette notifications; figures are subject to periodic revision by the Central Government and are not published in the controlling Act.

Unable to confirm as of 2026-06-17.

Source: Employees’ State Insurance Act, 1948 (as amended), ss. 2(15), 2(22), 49

The statutory obligation to cash out accrued but unused paid leave (typically annual or earned leave) on separation—whether termination, resignation, retirement, or death—continues to apply for employees governed by State Shops and Establishments Acts. However, two developments since 2025 materially affect this landscape: (1) full or partial commencement of provisions from the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), and (2) the repeal or amendment of certain state-level Shops & Establishments Acts (notably Bihar, as of June 2026).

Updated statutory floors — OSH Code, 2020 effect: The OSH Code, 2020, which came into force in phases during 2025 and 2026, overrides inconsistent provisions of state Acts where it confers more generous benefits. For shops and commercial establishments subject to the Code:

• Eligibility: The minimum service required to accrue paid leave for encashment is 180 days (lower than prior 240-day floors in many state Acts). [OSH Code, s. 32(1)]
• Encashment: On separation, all earned leave to the employee’s credit must be encashed at the full wage rate, whether the exit is due to resignation, discharge, retirement, or death. [OSH Code, s. 32(2), (6)]
• Auto-encashment of excess: Where annual earned leave exceeds 30 days, the surplus must be paid out at the close of the year. [OSH Code, s. 32(7)]

These rules apply to establishments covered by the Code and take priority where state law conflicts.

Current state law status — illustrated jurisdictions:

• Maharashtra: Maharashtra's Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, s. 18(4)-(5), continues to require encashment of all earned leave on termination. Payment must be made within two working days of termination or, in case of death, within two months. As of June 2026, the Act remains in force, subject to the OSH Code’s overriding provisions if more beneficial.
• Karnataka: Karnataka Act, s. 15(7) continues to guarantee payment for all accrued earned leave on exit, without a fixed statutory timeline for payment, and remains operative alongside the OSH Code where that is more advantageous for the employee.
• Delhi: Delhi Act, s. 22(6) requires encashment of earned leave at full wage on separation, payable by the next pay period after exit. Remains in force unless and until superseded by a more beneficial OSH Code rule.

Material legislative change — Bihar:

• As of 1 June 2026, Bihar has repealed its Shops & Establishments Act by ordinance, defaulting all commercial establishments to the OSH Code for leave accrual and encashment. ([Bihar Shops and Establishments (Repeal) Ordinance, 2026])

Employer action checklist (2026):

• For each establishment, employers must now check (a) whether the OSH Code or a state Shops & Establishments Act applies as of the current date, and (b) whether the OSH Code’s floors on leave eligibility/encashment are more beneficial than older state law standards. If so, the Code’s rules control.
• Payroll and exit processes should be updated for state-by-state compliance and prompt payment of leave encashment after separation, using the most employee-friendly standard available.

Source: Maharashtra Shops and Establishments Act, 2017, s. 18 Source: Karnataka Shops and Commercial Establishments Act, 1961, s. 15 Source: Delhi Shops and Establishments Act, 1954, s. 22 Source: OSH Code, 2020, s. 32 Unable to confirm direct text of Bihar repeal ordinance as of 2026-06-22.